GBPUSD started the first trading week of New Year with a rally from 1.5496 up to 1.5669. Then it declined to 1.5376 and closed the week at 1.5411. Thus, the currency pair rallied 201pts and then lost 293pts.
The British Pound keeps showing weakness against the US Dollar mainly due to the stagnation in the UK economy and the prolonged eurozone crisis.
GBPUSD started this week with a decline down to 1.5398. But later it managed to recover . Further on, the British Pound suffered from the UK’s balance-of-trade report, which showed a £8.6B deficit. Another factor pressing the market is the fact that Fitch Ratings still doesn’t deny the possibility of downgrading the sovereign ratings of some eurozone economies.
The last 2 trading days of the week are rich in major economic reports:
January 12th (GMT):
09:30 GBP Manufacturing Production
12:00 GBP Asset Purchase Facility
12:00 GBP Official Bank Rate
Tentative GBP MPC Rate Statement
13:30 USD Core Retail Sales
13:30 USD Retail Sales
13:30 USD Unemployment Claims
January 13th (GMT):
09:30 GBP PPI Input
13:30 USD Trade Balance
14:55 USD Prelim UoM Consumer Sentiment
The UK news block:
Manufacturing Production. The index is very significant as the UK manufacturing production makes up 80% of the country’s total production. Last month it lost 0.7%. This month it is expected to reach 0.0%.
Asset Purchase Facility. No changes are expected here. Consequently, it won’t affect the volatility of the underlying asset.
Official Bank Rate. The forecast suggests that the interest rate will remain unchanged.
PPI Input. This index indicates the rate of inflation for the products and raw materials purchased by manufacturers. The latest value was 0.1%. The forecast is unchanged, thus suggesting slight inflation and poor activity in the country’s manufacturing sector.
The UK economic indicators show poor performance as the country’s economy is probably falling into recession. If the US economy keeps improving, the US Dollar will probably strengthen against the British Pound.
The US news block:
Core Retail Sales. The forecast is +0.3%, which is much better than the previous figure.
Unemployment Claims. The amount of such claims is expected to increase by 1K, which is unlikely to affect the overall positive picture.
Trade Balance. It is expected to show a bigger deficit this time.
Prelim UoM Consumer Sentiment. This index is likely to gladden investors. Last month it grew up to 69.9. This time it is expected to reach 70.8.
It is necessary to pay attention to the ECB’s interest rate decision. Even though the forecast doesn’t suggest any change, the interest rate still may be changed, which will increase the volatility of GBPUSD.
The closest levels of resistance are 1.5388 and 1.5474. The closest levels of support are 1.5297 and 1.5160.
Provided by the Department of Options,
